Tag Archives: ethics

Celebrity Tenants

Between my current career as a Realtor and my prior career as a stage manager, I’ve been lucky enough to deal with several celebrities during my time in Chicago. Like anyone else, they have to live somewhere too. As a landlord, it’s very possible in Chicago that you’ll be contacted by a celebrity (or a member of their entourage) who is interested in renting your apartment. Here are some do’s and don’ts for dealing with the celebrity renter.

Don't get so starstruck by a famous tenant that you lose your business sense.

Don’t get so starstruck by a famous tenant that you lose your business sense.

Do: Remember that “famous” is very relative.

It might be a professional sports player, a celebrity chef, or a movie star. It could also be a local news anchor, car dealership owner, or even your child’s school principal. Or it could be someone you’ve never heard of, like the bass player from an 80’s hair band or a voice actress from one of your kids’ favorite cartoons. It could even be the author of your favorite real estate advice blog. 🙂 (more…)

10 Steps to Secure Your Home or Apartment for Showings

So your landlord or an agent has called to say that she needs to show your home.

For owners this should come as no surprise. If your house is on the market, showings will happen and your agent will probably request that you absent yourself while they occur.

For renters, showings may be a surprise as they can happen at any time of year. You don’t have to be moving out. A showing in the middle of your lease does not necessarily mean that your apartment building is for sale! Your landlord may be trying to get a better insurance rate or refinance the property. Both of these tasks could require access to your apartment. You should grant it provided that your landlord gives you proper advance notice.

Regardless of who is coming to view your apartment, though, you can be certain of one thing – strangers will be entering your living quarters and you may not be able to be home when it happens. Whether it’s a new prospective renter, an appraiser or a Realtor, you’ll want to take precautions to make sure that you’ve safeguarded your belongings. After all, your landlord’s insurance won’t cover the items if they go missing or get damaged.

Google currently shows over 36 million results for the phrase “robbed during an open house.”

Here are ten things you can do to make sure your stuff stays safe when your home has an encounter with stranger danger.

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Breaking a Lease in Chicago

When You’ve Gotta Go…

Lease breaks happen. Landlords hate them and often get really grumpy when their tenants don’t honor the full term of their lease agreements. They’re totally justified in being dour about it, especially if the tenant takes off in the middle of the winter. It’s an inconvenience, a hit to the wallet, a bad time for a vacancy, not to mention a broken promise. However, it’s important to remember that tenants, especially with home prices as low as they are here in late 2012, are renting for a reason. They know they can’t commit to a long-term home ownership situation. They know they may have to cut out early. They are renting because they are trying to be responsible about their large-scale purchases. The whole point of renting is that it allows for a much easier “out.”

I’d say that about 30-40% of the 1200+ leases that I have worked on since 2005 have wound up with the tenant leaving in the middle of a contract term. They may stay for a year, renew the lease, and then leave halfway through the second year, they may bolt in the middle of their first month, or they may even stay for 10 years and then suddenly have to depart. No matter what, it’s still means a broken lease and the potential for some very bad blood between the landlord and their departing tenant.

In Chicago, there’s two standard routes that a responsible tenant can take to break a lease. One is subleasing and the other is rerenting. They are often confused and somewhat murky. So, in the interest of making everything very clear, I’ve gone ahead and made a twee pink infographic for you, available after the jump.

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Dear Piggy: I lost my apartment! What do I do?

An apartment is never yours until the day you move in!

I recently received emails from a couple of beleaguered old friends who know that I work in the rental market. Names of the senders have been changed, naturally.

I’ve been away for the summer and my apartment lease is expiring at the end of the month. I warned my landlord that I would be out of town for a few weeks. While I was gone, the my lease renewal deadline came and went, and now my apartment has been rented out from under me! What can I do? — Sheila P.

And here’s the second one:

My boyfriend and I just rented our first two bedroom apartment together, but when we called the landlord to schedule key pickup we were informed that the current tenant is in jail! The apartment will not be clear in time for us to move in, and there’s no way for anyone to know how long it will take to clear the place out. We searched for weeks before we found this place. What do we do? –Marcus R.

A sad day for all. There’s nothing so frightening than having your current or future home yanked out from under you. A successful apartment move has many points of failure. Tenants tend to forget that apartment housing is a temporary arrangement, and that even a signed & fully-paid lease is subject to multiple contingencies. If you’re in a situation similar to Marcus or Sheila, read on to find out your options.

Analogy Time!

Go forth and shelve righteously, Librarian Repossession Brigade! [photo from 2011 Madison, WI protests by Madison Guy]

I got lucky today. I had a debt of just over $75 forgiven by the Chicago Public Library as part of their “Once in a Blue Moon” amnesty program. An overdue library book is a low-stakes version of Sheila’s situation. It is made very clear to us when we borrow the book (or apartment) that we will have to give it back. The date when we will have to do so is also made very plain to us. When that time passes, we can either bring the book back so that others may use it (move out), or keep it to ourselves and rack up fines. The only difference is that the library is not going to send the librarian repossession brigade to forcibly recover the books from our grubby little hands.

Even if Sheila had forgotten her precise lease expiration date over the course of the year, she probably remembered vaguely when she moved in, and probably had a pretty good idea of when her lease was going to expire. She probably assumed that the landlord would allow her to go month-to-month after the lease expired, or maybe she had an inkling of when the renewal offer would arrive and it just slipped her mind with all the travel.

Now, the landlord did the right thing by sending a paper renewal offer. A renewal, once signed, is as binding of a contract as the original lease, and a verbal renewal means a month-to-month agreement. However, in this day and age one would think that an emailed renewal as a PDF attachment would be just as effective. One would also think that the landlord would have called Sheila to warn her when her place went on the market, but this information could well be in the renewal letter itself. Under normal circumstances Sheila would have at least had a warning that the unit was being shown, as advance notice from the landlord would be required before any in-person showing. These days, though, an apartment can rent via video tour without the new tenant ever setting foot in Chicago, let alone entering the actual unit. The scenario, while obnoxious, is possible.

Sheila’s Options.

This is a situation where someone is going to get hurt and probably lose some money. The best possible option is the one that causes the least damage to the fewest people. Technically she had equal responsibility with her landlord for ensuring that she still had a place to live after her lease expired. Just like the library “due date” card, the start and end dates on her lease were clearly stated. The landlord has made it clear to her in writing that this scenario could occur.

Option 1: Move out.

If she goes, she needs to find a new apartment or a friend to crash with very quickly. This is obviously a very expensive and inconvenient option, but if the landlord is that uncommunicative it might be for the best. I wouldn’t recommend taking this route unless there’s no other recourse, though.

Who loses out? Two people: Sheila has to move, and the landlord has to incur the expense of turning over the apartment.

Option 2: Holdover.

Lack of communication only serves to narrow your options.

If Sheila does not get an agreement from her landlord to permit her to stay past the end of her lease, and then stays put, she’s now into what’s called a holdover situation. The landlord would have to get her evicted via the court system, a process that could well take months. However, Sheila should be aware that most Chicago leases have a holdover clause in the event of just this sort of situation. It usually reads something like this:

Tenant agrees that in the event Tenant fails to vacate and surrender the Premises upon termination of this Lease or Tenant’s right of possession of the Premises that: (1) Tenant shall pay as liquidated damages for the entire time that possession is withheld a sum equal to the greater of (i) three times the amount of rent herein reserved, pro rated per day of such withholding, or (ii) Landlord’s actual damages if same are ascertainable;

So basically, Sheila’s rent just tripled. And she’ll have an eviction on her record if she stays on without permission. As much as it would be tempting for Sheila to give back the same lack of communication that she received from her landlord, I’d also recommend that she avoid this particular option. Eviction records last a very long time.

Who loses out? All three parties: The new tenants lose the apartment, the landlord has to evict, and Sheila has to pay 3 times the rent and deal with the judgment on her record.

Option 3: Explain and Negotiate

Both parties are kind of in the wrong here. Sheila was lax in not paying attention to her lease expiration date. The Landlord was also in the wrong to not reach out to Sheila when he didn’t received a reply from her and theoretically knew she was out of town. Sheila should also know that the landlord is going to incur a considerable cost by turning the apartment over, even if the new tenant moves in on the same day that Sheila moves out. Both sides have something to gain from talking this out, as long as they can do so calmly.

My thought is that it’s in Sheila’s best interest to send a polite, non-accusatory letter to the landlord explaining the situation and offering to stay on at a rate that matches the new tenant’s rent. She should point out the potential for saving money. The letter should seek a win-win goal.

If the landlord has multiple apartments or friends with apartments, it’s possible that he may be able to shift the new tenants to another space. Yes, it’s annoying for the new tenants, but the landlord if he’s good will get two leases for the price of one and will get to retain a (probably very grateful) tenant.

If the landlord has just one unit, the new tenants are in for a shock much akin to what Marcus is going through, but there’s a very good chance that the they had several backup choices in mind. Even if a lease is fully signed by all parties and the deposit has been paid, it is still contingent on the landlord being able to deliver the apartment on the first day of the lease. Tenants, I hate to say this, but the apartment is never fully yours until the day you move in!

Who knows, it’s also possible that the landlord forced the new tenant into an earlier lease start date than they actually wanted.

Who loses out? The new tenants, and even then only in terms of time. They will get their deposit back, and there are other apartments. Unless this problem is discovered on moving day, chances are that any damage to the new tenants can be contained and the financial loss will be minor.

All told, option 3 actually causes the least harm, if it can be negotiated calmly and fairly without invoking the demons of the court system and the BBB. Of course, this puts the new tenants in a situation very similar to that of poor Marcus.

Marcus’ Options.

This is really a book. I kind of don’t want to live on this planet anymore.

At the other end of this spectrum is Marcus, who is probably thinking all kinds of mean things about his landlord and sticking little pins into the voodoo doll of the jailed, outbound tenant. After searching high and low with his partner and viewing about 15 apartments, they were so happy to finally find the one they wanted. And now it won’t be ready, there’s no ETA as to when it actually will be ready.

Option 1: Sue anyone and everyone.

The landlord had no right to advertise the apartment for rent! The landlord has a binding contract with Marcus! The landlord has to give up the apartment right now! Sue the family of the current tenant! Sue anyone involved in this whole mess!

Yes, Marcus can do this. Let’s go to the CRLTO, section 5-12-110(b) for proof.

Failure to Deliver Possession. If the landlord fails to deliver possession of the dwelling unit to the tenant in compliance with the residential rental agreement or Section 5-12-070, rent for the dwelling unit shall abate until possession is delivered, and the tenant may:

(1)     Upon written notice to the landlord, terminate the rental agreement and upon termination the landlord shall return all prepaid rent and security; or

(2)     Demand performance of the rental agreement by the landlord and, if the tenant elects, maintain an action for possession of the dwelling unit against the landlord or any person wrongfully in possession and recover the damages sustained by him.

If a person’s failure to deliver possession is wilful, an aggrieved person may recover from the person withholding possession an amount not more than two months’ rent or twice the actual damages sustained by him, whichever is greater.

Marcus can terminate the lease, or he can “maintain an action for possession.” That means suing, kids. And he can sue the landlord or the person wrongfully in possession.

Suing may make Marcus feel better, but it won’t get him into the apartment any faster, and will probably take up valuable time that could be spent looking for a different apartment.

Option 2: Go in and remove all of the current tenant’s belongings yourself.

This is also known as “breaking and entering,” or “trespassing and theft.” NO. Just. NO. Unless Marcus wants to get up close and personal with the outgoing tenant in jail – as a cellmate – NO.

Option 3: Wait for the apartment to be ready.

Under some circumstances a holdover situation could be cleared up very quickly. I’d imagine that the family of the jailed tenant does not want to be liable for triple the rent. Provided they can be found quickly and are responsible sorts, the apartment could very well be ready in a week or so. If Marcus really has his heart set on that apartment and only that apartment, it may be worth the wait.

If Marcus takes this option, the landlord may be able to assist with either storage of the furniture or a hotel, and should definitely waive the rent for the time that the property was unavailable. A former client of mine with multiple units offered a spare empty apartment in the same building for a couple of weeks when a similar situation arose due to the death of an outbound tenant, and then had his own workers shift the incoming tenant’s stuff into the real apartment once it was cleared.

Option 4: Find another apartment FAST.

There’s a fifth option but it involves some wibbly wobbly timey wimey stuff that is way beyond my pay grade to explain here.

It’s no secret that there are always apartments available in Chicago, and many of them are available to move into today. In a pinch you can always find a space. It may not be the dream apartment you’ve been waiting for, but it’s at least something. On the plus side, if it’s available for immediate move in you know for certain that it’s already empty!

This exact situation is why I will always sign my renter clients to representation agreements that run for about two weeks after their lease begins. Just in case something unforeseen happens and they cannot move in, I want to make sure they know that I can and I will find them a replacement immediately. I’ve done several rentals to folks who had the U-Haul sitting out front as we signed the paperwork.

This option does come with two warnings. First, Marcus must make sure to notify the first landlord in writing that he intends to terminate the agreement. Second, in the rush to find a backup apartment do not forget to do some research on the replacement landlord.

Have you ever found yourself in either of these predicaments? What did you wind up doing? Tell us in the comments!

Square footage, room counts and other lies my agent told me

Back in 2007 I received an interesting email from a local landlord in response to one of my Craigslist ads for an apartment:

Just a word of advice, if you say it’s 930 square feet no one is going to come to see it.  You’re in competition with landlords who would describe this apartment as at least 1300, 1400 square feet.  Tenants’ expectations of square footage are inflated because they’re judging square footage by what they’ve seen.  Describe this place as 1300 square feet and you’ll get more traffic.  They don’t have to rent it if they don’t like it.  Good luck.

The floorplan of the apartment in question.

The floorplan of the apartment in question.

Square footage is for engineers. Room sizes are for the rest of us.

I had measured this apartment, CAD rendered the floorplan – it was 930 usable square feet, give or take a few. I spoke with my client at the time and discussed this feedback with him. He and I agreed to continue listing the actual measured square footage. Neither of us wanted to waste our time or the time of prospective tenants who “didn’t have to rent it if they didn’t like it.”

So let’s get things straight. I’ve measured thousands of apartments and CAD rendered the results. Here’s what I’ve found:

  • Standard Chicago vintage studio: 200-400 sq ft.
  • Standard Chicago vintage 1 bed w/ eat in kitchen: 400-600 sq ft.
  • Standard Chicago vintage 1 bed w/ dining room or smaller 2 bed: 550-800 sq ft.
  • Standard Chicago vintage 2 bed w/ dining room 700-900 sq ft.

Above measurements are for Pre WWII walk-up buildings. Anything larger than that and the agent is either counting walls as part of the area or just guesstimating based on how the space “feels.” (more…)

“Affordable.”

I guess we all get a little nervous when new people move to town.

So this is a practical shelter blog, which means that I’ll be talking about affordable housing quite a bit going forward. People tend to get all up in arms about affordable housing and write me off as some kind of left wing crystal-gripping-mantra-chanting hippie when I use that term so I wanted to take a moment to talk about what it actually means.

“Affordable” does not mean low-income housing. “Affordable” does not mean Section 8 housing. It doesn’t even mean “crappy low-rent vintage housing with leaking windows and creaky porches.” When I talk about affordable housing – in particular, affordable rents – I am talking about housing that costs less than 30% of the average person’s gross income.

So let’s say that you’re earning under $35k per year. That’s a little above the median income for Chicago rental households. According to a 2011 survey by the Depaul Institute of Housing Studies and a recent study from early 2012 from the National Housing Conference, 75-80% of you guys are paying more than is considered affordable. 24% of you are paying more than half of your income in rent.  This does not make it cool or okay to do so. In fact, I’d go so far as to say that you guys are holding us back economically.  (more…)

10 Common First-Time Renter Mistakes

After I did first-time buyer mistakes for Monday it occurred to me that there’s other real estate virgins out there who might need a few warnings. Tenants, for example, are often the newest of all to the housing market, and they do tend to make some common errors that mark them as newbies in the apartment hunt. Whether this is your first apartment or your twelfth, avoiding these missteps will save you a world of grief.

It may be pretty, but can you cook in it? (Photo: ApartmentTherapy.com)

1. Choosing the prettiest apartment. I did this back in 2003. Found a lovely vintage apartment on the lakefront with crown molding, dining room chandelier, lots of space, and a shiny new kitchen. It was cheap, the landlord would accept my pet bunny, I rented it. I failed to take into account that the only bathroom was inside the bedroom. It turned out to be a very impractical location for me as I had a lot of overnight houseguests at that point in my life. Much like when choosing a spouse, it’s what’s on the inside that counts more than the apartment’s looks. Make sure the room layout and amenities suit your lifestyle.

Here’s one quick benchmark for practicality. Each of us has a ritual that we have to do on a regular basis at home, or the rest of the day doesn’t feel right. For me it’s my morning coffee and breakfast – I will NOT leave the house for the first hour or so after I wake up. For others it will be going through the mail right after they get home from work, or taking a pause from gaming to refill your water glass from the fridge. Figure out what you ritual is. As you go through each apartment, play out how that ritual will work for you in the new space. If it doesn’t work, nix the listing. (more…)

I’ll Title This Article Before it Runs (and other Deadline Disasters)

Tiny house with a red roof, next to a silver analog stopwatch.

Can an agent who ignores his own deadlines still adequately honor yours?

Real estate is a very time-sensitive business. From setting up the showings to closing the contract an agent needs to be able to plan ahead, use time as a negotiation asset, and track their clients’ deadlines. Failure to do so has all kinds of potential to cause you harm, cost you money or even lose you the entire deal.

They tried to warn us.

In January of 2010 the state of Illinois decided that 45 hours of lecture-based training was not enough for someone who’s selling your home or helping you to buy a home. For years that had been the minimum entry level training required for an Illinois agent to get their license. Effective May 1, 2012, the amount of training required has doubled to 90 hours, a mandatory interactive portion was added, and every real estate agent, from the smallest underdog to the biggest broker in the state, had to get a new license. In order to get the new license, they had to take some continuing education classes and pass an exam. It’s a 20 hour commitment at most – half a work week.

Realtors need 90 hours, but leasing agents (like those guys who work for apartment locators) only need 15 hours of training and can work for 90 days without having any license at all!

Normally licenses expire every 2 years on April 30. Half of the agents’ licenses expire in odd-numbered years and the other half expire in even-numbered years. Agents who have not taken their required education credits and paid the renewal fee get placed “on hold” and have to pay a penalty for renewing late.  In most renewal cycles, continuing education classes in April are jam packed with agents who have waited until the last minute. This time around, because of the new laws, every Illinois agent’s license expired on the same day – April 30, 2012. If they don’t take care of things they will lose the ability to practice real estate altogether. They will need to start all over again and take the 90 hour “Real Estate 101” classes. The stakes are much higher, the chances of getting a seat in a class much lower.

Every real estate agent in Illinois has known this is coming for two and a half years. We have all been bombarded by mailings, email alerts, phone calls and warnings from our office to take care of this important issue. We have all been made aware that if we don’t get a new license by May 1, we can no longer practice real estate and it will be very expensive in terms of time and money to resume business as usual.

30% of Agents Listened.

I’m writing this in early April to run on May 2, as I know that early May is always a mess. I have already completed the transition – in fact, I was finished with my continuing education credits by December 14, 2011 and had renewed my license by early February. Many agents will talk in their bios about how they “maintain awareness of current real estate trends through ongoing education.” They’re talking about continuing education classes here. I don’t even mention it in my bio as I think this should be a given for professional in any industry.  For all that agents claim to do the expected training, only 30% of my compadres have taken the necessary classes that will allow them to keep practicing real estate after May 1, 2012. First off, this means that it might well have been 2-4 years since your agent last had a refresher in the laws and restrictions that govern our business. But beyond that, let’s talk about how a last-minute agent can harm your attempt to buy, rent or sell a home.

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Tenant Hacks: How to background check your landlord

Magnifying glass looking at a house

Time to turn the tables.

Chicago Renters, I have to confess something – landlords these days hire as much for my skill in background checking as they do for my ability to market their apartments. Renters have this crazy reputation of being uniformly unemployed former sex offenders with bad credit who skipped out on their last lease. If you’re applying for an apartment chances are good that you will be subjected to a security check more thorough than those they apply to new police officers. I encourage this behavior – it helps to keep neighborhoods clean.

However, landlords have an equally unsavory reputation for being layabout shady shysters from foreign countries who are just a single late payment away from foreclosure and/or running off with your security deposit. It’s only fair that you should be able to do some background checking of your own, and fortunately a lot of the information is available free of charge.

When I’m representing renters I normally perform all of the following background checks as part of the service, but if you’re renting without representation in Chicago (or you’re working with an apartment locator instead of a real agent) you’ll have to do it yourself.

A quick disclaimer before we begin: this info pertains to Chicago renters only. Much of it works anywhere in Cook County, but if you’re renting elsewhere I’m afraid your situation is beyond my expertise. However, you’re welcome to try the techniques below and let me know if they successfully transferred to your state or city!

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Dear Piggy: Does a Chicago Landlord always have to pay for water?

Hand drawn graphic of water pouring into a piggy bank

Is it wise (or even legal) to make your tenants pay for water in Chicago?

I received the following question from a reader:

Dear Piggy,

I am a Chicago landlord. The new tenants in one of my two-flats have two small children and one more on the way. I recently received my water bill and see that the water usage is much higher than it was with the prior tenants. I know that nearly every apartment in Chicago comes with water included in the rent. I’m wondering, am I allowed to bill my tenants for water and sewer usage?
– Sincerely,
My Sink Runneth Over

The short answer is yes, a landlord in Chicago can technically bill a tenant for water and sewer usage. However, they can only do so in very specific circumstances, and only if the rental unit is metered individually. It is not a good idea though, due to a combination of risk and market expectations.

The long answer is, as you would guess, far more complex. (more…)

Occupy Everything: Breaking Down the Culture of Renting

Someone told me that people like top 10 lists as blog entries. I’ve been writing one for next Monday on things that people used to buy, but now rent instead. Writing the list has made me feel like something of a stodgy relic, thinking nostalgically about the old days… y’know, 5 years ago. Society has definitely shifted away from ownership and towards a culture where borrowing is more the norm.

The most telling shift is seen in Wikipedia’s historical definitions of the American Dream. Originally the concept referred to the low cost to buy farmland in the US. Now it is a “dream” of an equal chance for all to achieve success and prosperity. Success and prosperity are extremely subjective things, and even within that entry there’s some conflict over what indicates that one has succeeded and/or prospered. Is it a chance for equal education and a good job? If so, it’s got very little bearing on material items. However, in that same entry they state: “[h]ome ownership is sometimes used as a proxy for achieving the promised prosperity; ownership has been a status symbol separating the middle classes from the poor.” Personally, I would say that this is no longer true – rather, it now separates the upper class from the middle class, or it’s certainly heading that way. After all, the top 15 private landowners in the world are all either heirs, royalty or Ted Turner. (more…)